How do you teach your child to become a smart consumer?  The answer to that question is:  start early! 

I suggest you begin giving your child money lessons the first time they say “I want.”  The statement may be made as early as 3 years old so you need to be ready.  

When my 3 year old niece first spoke ‘ I want that’, I remember I was very happy. But just today morning, she drove me mad saying she wanted to wear a blue hairpin that belongs to her mom. I like your advice, but I am not sure how to talk to a young child who’s at her nagging best about needs and wants.  ~Saika~  Submitted on 2010/04/09 at 12:41am

When they say it – how about responding with an age appropriate reply – such as:  “You want to get that toy?  You already have one of those.  Do you know how much it costs?  It costs $3 dollars.  Hold up three fingers.  That’s how old you are.” 

Wait for their response or reply.  Will it be a question or statement?  Will it be a meltdown chant – “I want this toy!”  Regardless their reaction or your decision at that moment, know that you’ve begun a planned approach to teaching your child the fundamentals of personal money. 

You can re-introduce the concept any time.  When getting your toddler ready for the day – ask questions that allow you to use want versus need, such as:  “Do you want to go outside and play?”  Then ask: “But first do you need to go to the bathroom?”  Explain that going outside to play is what they want to do but going to the bathroom right now is what they need to do. 

As your child grows – so will his or her memory of the things they’ve heard that are needs versus the things that are wants.  Then you’re ready to up the ante and provide them with more concrete ways of understanding the difference and how the choice between needs and wants really matters.  

Gradually as they get older you introduce the concept of saving for something special rather than always buying something when they’re out with you.  And this opens the door for you making a point of explaining why you don’t/won’t buy things for them on impulse.  This conversation is one that leads to a much bigger concept:  the benefits of delayed rather than instant gratification.  

Now they’re beginning to appreciate the fact that it’s their money – which allows you to respond:  “Yes it is.  IT’S YOUR MONEY SO TAKE IT PERSONALLY ™.  Good job!”

Here’s to your health and wealth.

TAGS: April is Financial Literacy Month, Families, Kids and money

OK.  It’s April 15th.  Tax Day.  This is the day we all have to deal with Uncle Sam.  But instead of talking taxes – let’s continue our conversation about raising financially responsible children and why their money education should begin at a very early age.   

For many children, their first experience with personal money is when they get an allowance.  Many money experts suggest giving a child 50-cents or a dollar for each year of their age.  The actual amount is less important – at least initially – than the sense of financial independence. 

An allowance will help your child learn to handle their money and provide you an opportunity to introduce to them the idea of savings and why savings are important.  Look for banks in your community that have activities and incentives to help kids learn money basics. 

One of the important basics of money is learning to set goals that require accumulating a certain amount of it.  Talk to your child and ask what their goals are.  If it’s something they want, it’s the carrot that serves as their incentive.  Pardon the pun but – that way – you don’t have to become a nag.  And it’s yet another opportunity to discuss the difference between wants and needs. 

Just as I love the phrase – “reading is fundamental” – I tell children and their parents that “saving money is fun and mental”.  I want them to understand that minding over money really does matter.  I want them and their parents to embrace the philosophy that:  IT’S YOUR MONEY SO TAKE IT PERSONALLY ™.  An early sense of ownership of their “income” through birthday and holiday gifts, their allowance or summer job can create an excellent personal money management foundation for the future. 

April is Financial Literacy Month.  Tell a friend and share the wealth of money knowledge.

Here’s to your health and wealth.

TAGS: April is Financial Literacy Month, Kids and money

When does it make sense to start talking to your children about money?  I suggest very early. 

The age of three works for me because that’s just about when children start saying, “I want.”  When those words are spoken, I think you should have the first conversation with your child about needs and wants.  Make it simple.  Respond appropriately.  Don’t expect anything more than repetition of “I want” – but at least you’ve put in place a tiny bit of groundwork.  Each time the “I want” chant starts – ask if this is a need or a want and explain the difference – appropriately and personally to your child. 

Over time you will find that your child will begin saying what “it” is that they want – but you’ll find they will start asking whether what they’re asking for is a need or is it a want.  Take the moment and explain the difference.  Congratulate them on knowing how important it is to know the difference.

My entire mindset is finding a way to talk to your children about money.  They might not be mature enough to understand basic financial concepts but they will understand that money is something they can talk about.  With that knowledge – as they get older – it will be much easier to teach them about handling money wisely.  It will become habit forming. 

These early conversations will make a difference when it comes to offering your child an allowance which is usually a child’s first experience with the sense of financial independence.  Be sure to explain to them what an allowance is why, they’re getting it, whether it is tied to doing household chores or not and how they will choose what to do with this money.  

This is where I’d start talking to them about something called savings and the benefit of learning this life lesson early.  Tell them a mantra they can bank on forever.  Tell them IT’S YOUR MONEY SO TAKE IT PERSONALLY ™. 

April is Financial Literacy Month.  Here’s to your health and wealth.

TAGS: Allowances, Raising money smart children, savings

I’m going to start this column the way I always end my weekly message:  “Here’s to your health and wealth.”  I figure since April is officially National Financial Literacy Month - I wanted to  send you double good wishes for your physical and fiscal well-being.

April is when there’s an all out effort to highlight the importance of being financially well educated and teach Americans how to not only establish – but maintain healthy financial habits.  People talk about saving money but I like to up the ante and talk about the lofty goal of  “wealth building”.

The measure of wealth is definitely individual but the process by which to do it is the same.  Wealth to one person can be the ability to buy a home where the master bedroom has a bathroom.  Wealth to another is having stock in certain companies.  In our current state of economic disarray – wealth can simply be defined as having whatever amount of money is necessary to keep the lifestyle to which you’ve become accustomed or to which you’ve chosen to downsize.

Building wealth means making decisions that will position the next generation in one’s family to continue building on it.  In order for them to continue the “wealth building” – they must be taught the disciplines and habits that keep it growing.  Money skills are some of the best assets caring adults can offer growing children.  Since the dawn of civilization, the person in the tribe or community who could count or knew numbers was highly revered. 

I’m a Baby Boomer.  Are you?  If so, together we are part of the largest mass graying of America in the country’s history.  79 million of us were born between 1946 and 1964.  About 10,000 of us a day for the next 10 years or so – are turning 50.  And a lot of Boomers are playing financial catch-up as a non-affordable or dramatic lifestyle downshift to retirement looms in the midst of loosing long saved money as the recession enters its 17th month.

But in today’s difficult economic times of high unemployment – there’s another big factor that impacts stretching hard earned dollars:  longer life spans.  More than 5 million Americans are over the age of 85 and at least 26 million are age 70.  While we celebrate that elders are living longer, they worry about outliving their savings – knowing that their nest egg can be gone with just one, life threatening illness.  Meantime, Baby Boomers who have been on course, saving enough money for their own later years – find themselves strained trying to fill the money gaps for the generation above us (our elders) and the one below us (our children) – thus the term “sandwich generation”.

These circumstances coupled with the natural erosion of investments and now the recession’s impact – means everyone must commit to maximizing what you have.  That’s why making money concerns and solutions a “family affair” – is crucial. 

Make this month of April your Financial Literacy money “ah-ha” moment.  How each of us commits to handling our personal money really matters.  Wealth building gives us the ability to invest in one’s self and one’s community.  Passing along that attitude and actively teaching money management skills to the next generation are what create a healthy mindset for accumulating and sustaining wealth.

Here’s to your health and wealth.

TAGS: baby boomers, financial literacy, investments erosion, longer life spans, multiple generation households, recession, wealth building